Nuclear Plant Cost Recovery Legislation Stirs Revolt

There appears to be a growing backlash across the country to legislation allowing utility companies to charge consumers for work on nuclear power reactors before the jobs are finished or even started.

According to the Des Moines Register, at least 10 states have already passed legislation authorizing power companies to raise rates on customers to underwrite projects that most traditional institutions of finance won’t even consider. The Iowa state House passed an advanced cost recovery bill last year, but it has yet to pass the state Senate.

“The push for early cost recovery for construction of nuclear reactors in Iowa and elsewhere is driven by one basic truth about new nuclear reactors: They are totally uneconomic,” Mark Cooper, a well known nuclear watchdog, told the Register.

“The markets won’t touch these projects, so the industry’s only alternative is to enlist state lawmakers to leave consumers holding the bag,” added Cooper, a fellow at the Vermont Law School’s Institution for Energy and the Environment.

As a result, the Register noted, consumers are complaining from Iowa to Florida, where residents in the Tampa area are being asked to pay $43 billion for two plants still on the drawing board that some nuclear experts say will never be built.

In Iowa, Mid-American Energy wants its customers to do the same thing, claiming that a pay-as-you-go approach will help secure needed financing for new projects there at lower interest rates.

Ellen Vancko of the Union of Concerned Scientists told the Register that the effort by utilties to in effect prepay for work that may or may not be completed grew from “past mistakes” that led to cost overruns in the ‘70s and ’80s on nuclear plant construction.

“Instead of learning that they aren’t very good at building large and complex and expensive power plants, they learned to shift the risk to the customers,” said Vancko, who worked in the power industry for 25 years.

A report by the Congressional Budget Office seems to back up that statement. The Register noted a CBO finding that the costs associated with 75 nuclear plants built from 1966 to 1977 averaged 207 percent of the original estimates.